Ringgit declines on US concerns

ASIAN CURRENCIES ROUND-UP

Malaysia's ringgit declined for a third day after the US central bank officials indicated the world's biggest economy is slowing, hurting the outlook for Asian exports.

The ringgit held near the lowest in three weeks as traders bet the Federal Reserve will reduce its overnight rate for loans between banks from 5.25 per cent at the September 18 meeting. A US government report last week showed the economy lost jobs in August for the first time in four years. Malaysia sends one-fifth of its goods to the US, its biggest export market.

"The ringgit will be on a weaker bias,'' said Nor Alfian Din, who manages Asian currencies and swaps in Kuala Lumpur at Malayan Banking Bhd., the nation's biggest lender. "The view on a U.S. slowdown is converging and the Fed will need to cut to sort out the mess.''

The ringgit traded at 3.5155 against the dollar as of 5:10 p.m. in Kuala Lumpur compared with 3.5125 late yesterday, according to data compiled by Bloomberg. It has weakened 1.3 per cent in the past three months, the second-worst performer after a 4.2 percent loss in the Indonesian rupiah. Fed Governor Frederic Mishkin and San Francisco Fed President Janet Yellen said declining home prices may threaten consumer spending. Atlanta's Dennis Lockhart backed off remarks he made four days ago that the U.S. housing slump was having a limited impact on the economy.

Five-year government bonds declined, snapping a six-day rally, on speculation investors will sell existing debt before an auction of 3.5 billion ringgit ($995 million) of debt tomorrow.

The yield on the 3.718 per cent note due June 2012 rose 1 basis point, or 0.01 percentage point, to 3.55 per cent, according to central bank data. The price fell 0.05, or 50 sen per 1,000 ringgit face amount, to 100.72.

The government has raised 32.5 billion ringgit through 10 of the 16 slated sales for 2007, according to data published by Bank Negara Malaysia. The finance ministry estimated sales will total 53 billion ringgit in 2007, a 47 percent increase from 2006.